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GST audit, inspection and search are different statutory actions. A section 65 audit is a planned review of a registered person’s records, normally preceded by written notice. Section 66 is a separate specialist audit ordered during another proceeding. Section 67 inspection, search and seizure are investigative powers that depend on specified “reasons to believe” and written authorization. The document you receive—its section, form, issuing officer, premises, period and stated purpose—determines what you should do next.
The CBIC-hosted Act page used for the statutory references below contains the 2017 Act text and should not be treated as a fully consolidated 2026 version. Before responding to a real notice or visit, check current amendments, rules, notifications and the applicable state or Union territory GST law, and obtain case-specific advice where necessary.
GST audit, inspection and search at a glance
Do not treat the words “audit,” “inspection” and “search” as interchangeable. They have different statutory purposes, thresholds, documents and consequences under the Central Goods and Services Tax Act (CGST Act). This table is a practical orientation; the exact wording of a notice or authorization controls in an individual case.
| Process | Purpose and scope | Trigger and officer | Notice or authorization | Materials and premises | Timeline and possible follow-up |
|---|---|---|---|---|---|
| Section 65 audit | Records-focused verification of a registered person for a defined period | Commissioner or officer authorized by general or specific order; audit period is a financial year or multiples of one under the rules | FORM GST ADT-01; at least 15 working days’ advance notice | Business premises or tax office; books, returns, invoices, reconciliations, electronic records and supporting evidence | Three months from commencement; Commissioner may record reasons for an extension of up to six additional months. Findings are communicated within 30 days after conclusion, generally in FORM GST ADT-02 |
| Section 66 special audit | Specialist examination where the nature or complexity of a case and revenue interest warrant it during another proceeding | Officer not below Assistant Commissioner, with prior Commissioner approval; chartered accountant or cost accountant nominated by the Commissioner performs the examination | Written direction to the registered person; this is not the routine ADT-01 audit process | Records and accounts selected for the special examination | Report within 90 days, with a possible extension of up to another 90 days for material and sufficient reason or on application; registered person must have an opportunity to be heard on material proposed for use |
| Section 67(1) inspection | Investigation of suspected suppression, excess input tax credit or contravention intended to evade tax; specified rules also cover transporters and warehouse or godown operators | Proper officer not below Joint Commissioner rank has reasons to believe; written authorization may direct another central tax officer | Written inspection authorization, including FORM GST INS-01 in the rules | Relevant places of business and connected locations within the authorization | No section 65-style advance-notice period is stated in the quoted provision; findings or further proceedings depend on what the inspection establishes |
| Section 67(2) search and seizure | Locating goods liable to confiscation or documents, books or things useful or relevant to proceedings that are believed to be secreted | Qualified proper officer has reasons to believe; may search personally or authorize another central tax officer in writing | Written search authorization; seizure is documented under FORM GST INS-02 in the rules | Authorized premises and specified goods, records or things; removal or dealing with goods may be prohibited when physical seizure is impracticable | Retention, production and return are governed by the Act and rules; later tax, confiscation or other proceedings may follow |
Statutory references: CGST Act text hosted by CBIC, and CBIC Assessment, Audit and Rules.
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Section 65 GST audit: a notified review of records
What the audit is designed to do
A section 65 audit tests whether the registered person’s turnover, tax liability, exemptions, deductions, tax rates, input tax credit, refunds and returns agree with the underlying books and documents. It is a compliance examination, not automatically a search for concealed goods. The Commissioner, or an officer authorized by a general or specific order, selects the period, frequency and manner permitted by the rules.
The audit may take place at the registered person’s business premises or at the tax office. The officer can require facilities needed to verify books and documents, ask for information and seek assistance from personnel. An audit can therefore involve finance staff, warehouse records, information-technology systems and outside accountants who maintain the books.
Notice, period and commencement
The registered person should receive FORM GST ADT-01 at least 15 working days before the audit. The rules describe the period audited as a financial year or multiples of a financial year. Read the notice for the exact years, GSTIN, premises, officer and records requested; a request that reaches beyond the stated period should be clarified in writing rather than silently ignored.
For the statutory clock, commencement is the later of the date on which the called-for records or documents are made available and the date the audit is actually instituted at the business premises. Keep evidence of both events, such as a covering email, document-transmission log or signed attendance record, because the commencement date affects the completion period.
How the review normally proceeds
- Receive and authenticate ADT-01. Check the GSTIN, legal name, period, location, issuing authority and contact details against official records. Ask the jurisdictional office to confirm anything that appears inconsistent.
- Submit an indexed information pack. Use a schedule that maps each item requested to a file name, ledger, return or system report. Keep a copy of everything supplied.
- Reconcile the tax data. Prepare period-wise bridges among books, outward-supply returns, payment returns, e-invoice or e-way-bill data where relevant, input-credit records and financial statements. Explain timing differences before the officer has to infer them.
- Support exceptions. Organize tax invoices, credit and debit notes, contracts, delivery evidence, payment records, exemption documents, refund files and input-credit eligibility support.
- Manage questions centrally. Nominate a finance lead who can obtain records from sales, procurement, logistics, payroll and information technology, and who records what was asked and when it was answered.
The practical categories above reflect the audit rules; they are not an exhaustive checklist prescribed identically for every business. The CBIC audit rules page describes verification of supporting documents, books and returns, turnover, exemptions and deductions, rates, input tax credit, refunds and other relevant matters.
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Completion and findings
The statutory audit period is three months from commencement. The Commissioner may extend it by recording reasons, but the extension cannot exceed a further six months. Keep a calendar with the commencement evidence, requests received, responses delivered and any written extension.
Within 30 days after the audit concludes, the proper officer must inform the registered person of the findings, rights and obligations and the reasons for those findings. The rules provide FORM GST ADT-02 for communicating finalized findings. Read the form against your reconciliations: distinguish an agreed factual correction from an allegation that requires legal or documentary rebuttal.
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An audit finding is not itself the final tax demand. If the officer believes tax was unpaid or short-paid, a refund was erroneous, or input tax credit was wrongly availed or utilized, the department may initiate separate proceedings under section 73 or section 74, as applicable to the facts and the current law. Preserve the audit file and explanations so that any later notice can be answered consistently and within its own deadline.
Section 66 special audit: when a nominated accountant examines the records
A section 66 special audit is different from the ordinary section 65 audit. During scrutiny, inquiry, investigation or another proceeding, an officer not below Assistant Commissioner rank may, considering the nature and complexity of the case and the revenue interest, direct a registered person in writing to have records examined by a chartered accountant or cost accountant nominated by the Commissioner. Prior Commissioner approval is required.
The nominated professional’s report is allowed 90 days. The Commissioner may extend that period by up to a further 90 days when there is material and sufficient reason or when the registered person applies for an extension. The Commissioner determines and pays the examination or audit expenses, so the business should not assume that it must appoint and fund the nominated examiner itself.
Material from the special audit that the department proposes to use in proceedings must be put to the registered person with an opportunity to be heard. Treat the direction as a focused evidentiary exercise: identify the accounting areas covered, preserve source data and provide explanations that tie each conclusion to the relevant contract, invoice, ledger and return.
Section 67 inspection: an investigative visit
When inspection can be authorized
Section 67(1) applies where a proper officer not below Joint Commissioner rank has reasons to believe that a taxable person has suppressed transactions or stock, claimed excess input tax credit, or contravened the Act or rules to evade tax. The provision also addresses transporters and warehouse or godown operators in specified circumstances. The qualified officer may authorize another central tax officer in writing to inspect relevant places of business.
Inspection is therefore not simply an unannounced version of a routine audit. Check the stated factual basis, the premises covered and the officer’s rank. The rules include FORM GST INS-01 for the authorization. Ask for a copy and record the time officers arrive, the locations visited and the records or goods examined.
How to respond during an inspection
- Verify identity cards, designation and the written authorization without obstructing lawful activity.
- Call the designated internal contact and a qualified GST adviser or lawyer if the scope is unclear.
- Provide access to the authorized areas and records, but do not volunteer unrelated material or alter, delete or back-date data.
- Keep a contemporaneous log of requests, explanations, copies supplied and people present.
- Ask that factual corrections to an inventory or statement be noted before signing.
Section 67 search and seizure: stronger powers and safeguards
Statutory threshold
Search and seizure under section 67(2) require the qualified proper officer to have reasons to believe that goods liable to confiscation, or documents, books or things useful or relevant to proceedings, are secreted in a place. The officer may search personally or authorize another central tax officer in writing. The authorization should identify the premises and the legal basis; it is not the same document as a section 65 audit notice.
What may be taken or restricted
Goods, books, documents and other relevant things may be seized and the rules provide FORM GST INS-02 for the seizure order. If goods cannot practicably be seized, the Act permits an order prohibiting their removal or dealing without permission. Obtain copies of seizure documentation and make your own itemized inventory, including serial numbers, quantities, condition, location and the person who handed over each item.
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The Act and rules also address retention and return of seized or produced materials. Request a receipt for every physical item and a documented copy or forensic image process for electronic data where appropriate. Do not sign a statement you have not read; mark factual corrections and obtain a copy of anything signed.
What to prepare before any GST visit or notice
Core records file
- Notice, authorization, forms, identity and contact details of the issuing officer.
- GST registrations, amendments, business-location list and authorization letters for representatives.
- Period-wise outward and inward supply registers, general ledger, trial balance and financial statements.
- Filed returns, tax-payment challans, reconciliation statements and explanations for differences.
- Tax invoices, credit and debit notes, contracts, purchase orders, delivery records and proof of payment.
- Input-tax-credit workings, vendor support, reversal calculations and blocked-credit analysis.
- Refund applications, sanction or rejection orders and evidence supporting export, zero-rated or inverted-duty claims where relevant.
Electronic-record controls
GST accounts-and-records rules address electronic records, audit trails and inter-linkages, source documents, record layouts, data dictionaries and explanations for codes. Keep systems available in a readable, exportable form and preserve the original audit trail. The relevant CBIC accounts and records rules should be checked for the records applicable to your business model.
People and premises
- Name one senior coordinator and deputies for finance, tax, stores, sales and information technology.
- Maintain a visitor and document-production log.
- Know where archived invoices, backups, emails and warehouse registers are stored.
- Brief staff to answer accurately, avoid speculation and escalate legal questions rather than improvising.
- Separate privileged legal advice and personal data where lawful, while complying with a valid request.
Step-by-step response when officers contact you
- Classify the event. Determine whether you have ADT-01, a section 66 direction, an INS-01 inspection authorization, an INS-02 seizure order or another communication. The section and form are more reliable than an informal description such as “GST raid.”
- Check scope. Note the GSTIN, legal entity, premises, period, records, goods and officer named. Ask for clarification in writing where the document is incomplete.
- Verify authority. Confirm the officer’s identity, rank and jurisdiction through official channels. Do not rely on a phone number or email supplied only in an unexpected message.
- Preserve evidence. Suspend routine deletion and retention changes for relevant accounts, devices, CCTV and correspondence. Do not create replacement files that obscure the original history.
- Set a controlled production process. Provide indexed copies, keep duplicates and record each handover. For seized items, reconcile your inventory with the department’s receipt before signing.
- Answer in writing. Give concise factual explanations supported by schedules. Identify documents not yet available, state when they will be supplied and request a reasonable written date if needed.
- Review the outcome. Compare the findings or seizure records with your own log. Calendar every response, payment, appeal or hearing deadline in a later notice; the end of an audit does not automatically end the matter.
Common mistakes and how to avoid them
Calling every visit an audit
A business that assumes a section 67 search is merely a records review may fail to preserve an inventory or challenge an incorrect description of seized material. Start with the statutory section and written authorization.
Ignoring a notice because records are not ready
Silence does not stop the statutory process. Acknowledge the communication, explain the specific retrieval problem, propose a delivery schedule and continue preparing the complete file.
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Statements made under pressure can conflict with ledgers or later returns. Have the responsible process owner answer, label estimates as estimates and follow up with a documented reconciliation.
Mixing entities, GSTINs or periods
Group-company data and prior-year figures can obscure the scope. Use separate folders and schedules for each legal entity, GSTIN and financial year, and identify any shared-service records.
Altering electronic data
Deleting, renaming or “cleaning” records after contact can damage credibility and may create a separate issue. Preserve native files, system logs and backups, and document any ordinary retention process that continues automatically.
Assuming an audit finding is immediately payable
Read the communication to determine whether it is an audit finding, a show-cause notice, an order or a request for information. Each has different rights and response periods; obtain advice before admitting liability or paying a disputed amount.
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The CGST Act is the central framework, but analogous state and Union territory GST enactments, delegated powers and notifications can affect the officer, form, jurisdiction and procedure. A business operating across states should check the authority named in the document and the law applicable to the GSTIN and premises involved. Do not assume that a central-tax form or deadline applies unchanged to every state-tax communication.
For current work, compare the notice with the latest official consolidated Act, rules, circulars and notifications. The CBIC pages are useful statutory references: Act text, assessment, audit and related rules and accounts and records rules. A qualified GST professional should review a complex special audit, seizure, suspected evasion allegation or proposed demand.
The Bottom Line
Identify the statutory section and document first: section 65 is a notified records audit, section 66 is a directed specialist audit, and section 67 covers reason-to-believe inspection, search and seizure. Preserve originals, control document production, record every handover and verify the current central and state/UT rules before taking a substantive position.
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